Buying a house in Ghana should be very easy when you are a renowned real estate agent or experienced real estate buyer. However, if this is your first time trying to buy a house in Ghana, this article should help explain how to do it.
Apart from having the capital, finding the right house in the perfect location might not be easy for any buyer, especially when that buyer doesn’t reside in Ghana. Residents in Ghana might have the advantage of knowing the locations that best suit them. The most important thing is identifying the value of desired locations and comparing prices to determine whether the price for the house is worth its location in terms of economics and market valuation. As a buying agent, you must know and understand the nitty-gritty and processes involved in acquiring a property.
During these processes, any small mistake or discrepancy might result in the loss of huge sums of money. Also, when you understand your buying rights and the best strategies to bargain with and arrive at your perfect amount, you will save money, time and some change to boot..
PROCESS OF BUYING A PROPERTY IN GHANA.
Despite the complex nature of buying property in Ghana, the advantage is that, landed property is undoubtedly a valuable asset to acquire in the country in this age because of its ever-increasing rate of appreciation with time.
CAN A FOREIGNER BUY PROPERTY IN GHANA?
Can a foreigner buy property In Ghana? The answer is “Yes”. There are no restrictions on foreigners buying property in Ghana. However, it is important to consider the aforementioned classification of land in the country, as certain land types cannot be owned privately. Land litigation cases are about 80% of all cases in the high court’s so it’s best to follow all the due processes and obtain professional and legal advice when buying land in Ghana.
LEASE PERIODS IN GHANA
In the past decade, land laws have been revised such that land can only be leased for up to 99 years and not outrightly sold. Land legislation however allows for land to be leased beyond 99 years in certain peculiar instances. It is important to note that land legislation in Ghana allows for non- Ghanaian to obtain not more than a 50-year lease. A lease is renewable when the time is up. To ensure that future generations do not lose the land when the lease expires, it is important to ensure that the owner of the land state in the transfer agreement that the lease is renewable when the expiry date is near.
BUYING PROPERTY IN GHANA AS A FOREIGNER
The most important action to take is to find out who the rightful owner of the land is, and whether the land is owned out rightly or mortgaged. This can be achieved by requesting for a land search to be carried out on the said land at the Lands Commission of Ghana. A search is a term used to describe a thorough investigation carried out at the overseeing government agency to find out information about a piece of land. An indenture or cadastral plan of the said land is useful in a search, as it provides relevant the technical parameters needed to facilitate a successful search. It is the duty of the seller to provide the buyer of the land with a certified copy of an indenture or a cadastral plan of the land.
HOW TO DO DUE DILIGENCE
The information derived from a search includes the location of the land, size, topography, the type of the land, the rightful owner, whether the said land is being disputed upon or not, and whether it is suitable for residential purposes or not. It is important to note that, when buying property in Ghana, every dime spent carrying out a search is worth the expense. Also, exercising patience is key, as the search could take time, usually as much as one month. Although the process may seem slow, spending time to follow the appropriate procedure is rewarding when it comes to Real Estate in Ghana. It will save you years of litigating in court as well as losing your money to unscrupulous real estate agents.
After the search, be sure to do a private survey and draw a site plan of the land to confirm that the communicated size and boundaries are correct. To avoid doubt and falsification of the aforementioned parameters, employ the services of a surveyor yourself instead of leaving it in the care of the seller.
PURCHASE AND TRANSFER AGREEMENT.
Once every form of due diligence has been done and the buyer is sure that the said piece of land is risk-free and purchase-worthy, it is necessary to draft a transfer agreement to be signed by both parties and their witnesses prior to making payment. This should be done under the strict supervision of a lawyer who will ensure that all legalities are met and there are no loopholes that could lead to litigation in the future. It is advisable to seek legal assistance from a lawyer when buying property in Ghana.
After signing the transfer agreement, a deed of conveyance is prepared by a lawyer to be signed by both parties. This document attests to the fact that the title of the land has been passed on to the buyer.
Depending on the buyer’s financial strength and the agreement between both parties, payment can be made out rightly or by installments. Paying in installments gives the buyer an interesting kind of advantage. It allows for more time to pass such that, any irregularities surrounding the ownership of the land could eventually come up before full payment is made.
REGISTERING PROPERTY IN GHANA
The final step to take is to register the purchased land with the Lands Commission of Ghana and secure a land title certificate. This could take up to about a year, but it is an important step in a land acquisition that must not be overlooked. A land title certificate to your land is the ultimate land document in Ghana. It literally makes the owner immune to litigation.
PROPERTY TAX IN GHANA
In Ghana, it is required of property owners to pay property tax. Property tax is an annual levy issued by local government authorities on the estimated value of an immovable property and depending on the location of the property. This usually falls a range of about 0.5% to 3% of the estimated value of the property.
Most real estate companies do not only sell the property but also offer assistance with documentation and payment of civic obligations such as payment of property tax. Hence, when buying property using the services of a real estate company or even an estate agent, ensure to enquire about property tax and other civic obligations owned by the state as a property owner.
BUYING FROM AGENTS AND DEVELOPERS.
Due to the complexity of the real estate industry, employing the services of real estate companies is highly recommended for foreigners. These companies purchase large portions of land, complete the complex processes associated with land acquisition and resell those lands in simpler processes to individuals. They also build and sell luxury homes and affordable houses mostly within gated communities.
Their services may come off as expensive, but their ability to absolve the complexity, stress and litigation associated with buying property makes it worth every penny. Also, when dealing with real estate companies, one can be sure to buy land or landed property that is serviced and located in a safe and comfortable environment.
MORTGAGE OPTIONS
A mortgage is a loan secured from a bank to fund property acquisition. It can be assessed whether an individual intends to build or buy a house. Payment of mortgage loans is spread across a number of years, with the average period of payment in Ghana being five years. Most banks which offer mortgages are able to help you chose a suitable mortgage option using a mortgage calculator.
A mortgage calculator is a software that determines the mortgage option suitable for an individual based on factors such as their income, the duration of payment they find comfortable, and the price of the property.
Mortgage options offered by banks in Ghana include Home Purchase Mortgage, Home completion mortgage, Home improvement Mortgage, and Equity Release, to mention but a few. In Ghana, different banks have different mortgage options. Assessing a suitable mortgage facility requires an in-depth understanding of the options available.
First National Bank in association with Ghana Home loans provides customers with different forms of mortgages in Ghana. First National Bank offers three types of home purchase mortgage products.
HOME PURCHASE MORTGAGE
* First Time Buyer
This product serves the needs of applicants looking to buy their first home. The loan period is up to 10 years for cedi loans and 15 years for dollar loans. The first step is for the prospective homeowner to identify a house that they wish to acquire. Once a suitable house has been identified, the next step is to negotiate the terms of purchase with the vendor and obtain an offer letter for the property. The applicant can then access a Purchase Mortgage from us to buy the property.
* Buy To Let
This product is offered to applicants who already own a home but wish to buy another investment property for the purpose of renting it out to tenants.
* 100% Purchase
This product serves the needs of applicants looking to buy their first home. The loan period is up to 10 years for cedi loans and 15 years for dollar loans.
LAND PURCHASE MORTGAGE
This product meets the needs of applicants seeking to purchase serviced parcels of land designated for residential use. Tenure of the loan is up to 3 years for cedi loans and 5 years for dollar loans. A prospective client is to identify the parcel of land, obtain an offer letter from the vendor after agreeing on the terms of sale. The applicant can then apply for a Land Purchase Mortgage from First National Bank.
In addition to the Land Purchase Mortgage, an applicant may also apply for a Home Construction Mortgage to build on their land. This facility allows the applicant, after purchasing the land and with the requisite land documentation, to obtain a short-term construction loan from us to build and complete their property within 12 months. Upon completion of the property, First National Bank will convert the Home Construction Mortgage into a long-term mortgage of up to 10 years for cedi loans and 15 years for dollar loans.
HOME OWNERS MORTGAGE
First National Bank offers two different types of homeowners mortgages
* EQUITY RELEASE
Homeowners with a demonstrable source(s) of income who wish to borrow on a long-term basis using their home as collateral can access the Equity Release Mortgage. First National Bank offers existing homeowners the opportunity to release equity or other obligations or personal needs.
* Home Improvement
Homeowners with a demonstrable source(s) of income who wish to borrow on a long-term basis using their home as collateral can access the First National Bank Home Owners Mortgage. The bank offers existing homeowners the opportunity to release equity to renovate or extend their property
SAVE-TO-OWN MORTGAGE
The Save-to-Own product is designed for individual clients who have difficulty proving their income according to First National Bank’s regular mortgage standards. With Save-To-Own, you have a great opportunity to service a mortgage by making monthly payments into your account during the savings phase of the product. The product will have two phases:
Savings & Mortgages
Prospective borrowers will be required to make regular payments into a savings account, equivalent to the projected monthly repayment under a future loan amount. These payments will be made over tenors ranging between 12 months and 24 months.
Once a borrower satisfies the savings requirements over the agreed tenor, the mortgage will be disbursed.
TENURE
12 to 24 months for the savings dependent on applicant profiling and type of mortgage product; based on the Bank’s underwriting criteria.
Up to 15 years for the mortgage after the savings phase.
The amount saved during the savings phase may be used for the payment of facility fees, loan installment payments, or any other purpose as the applicant may deem fit.
Balance of the account may be used as the required minimum deposit for the property to be purchased.
There will be no issuance of debit cards on the account until the second phase of the product.
There will be a dual-staged underwriting process as follows:
* A standard underwriting at the time of the application.
* A review of the first underwriting at the end of the savings phase, to ensure the applicant still meets all lending criteria.
